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In re Zaochney

United States Bankruptcy Court for the District of Alaska
2011 WL 6148727 (2011)


Nada Zaochney (plaintiff) signed a loan agreement for a credit line with Alaska USA Federal Credit Union (Alaska Credit Union) (defendant). The loan agreement provided that any collateral pledged as security for the other loans that Zaochney had with Alaska Credit Union, including future loans, would also serve as security for the credit line. Zaochney purchased a car from Alaska Sales and Service that was financed through Alaska Credit Union. The retail installment-sales contract for the car provided that the purchase of the car secured any other obligations owed by Zaochney to Alaska Credit Union, either at the time of contracting or in the future. Zaochney later filed for bankruptcy. Zaochney filed a motion to value Alaska Credit Union’s security interest in the car. Alaska Credit Union and Zaochney agreed that the car’s value was $12,950. Alaska Credit Union argued that the car secured not only the balance due on the car, but also the outstanding balance on the credit line. Zaochney argued that the car was collateral only for the car loan because the dragnet clauses in the loan agreements were unenforceable.

Rule of Law


Holding and Reasoning (MacDonald, J.)

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